Identity Theft Protection FAQ's
Identity theft is the deliberate misuse of another person’s identifying information. Today, the classic example is when a thief steals a person’s social security number and uses it to open new accounts for financial gain. Identity theft’s loose definition has more broadly come to encompass other forms of fraud that typically take place online such as credit card fraud, medical benefit fraud, impersonating someone to take out payday loans in their name, and more.
Calling identity theft protection and insurance a necessity is probably a bit of a stretch. Most cases labeled identity theft today are categorized as credit card fraud, and only a fraction deal with stolen social security numbers. These days, credit card fraud can typically be resolved by the bank in question at no cost to the card holder. Still, subscribing to an identity theft protection service can go a long way towards not only protecting your assets, but protecting your credit. Once your credit score has been smeared–even if the cause is fraudulent–it can be very difficult to fix. This is why most identity theft protection agencies offer credit monitoring as an optional or included feature.
Each identity theft protection company will offer varied benefits and features, but they typically include three primary services:
- Monitoring: The company will monitor your accounts for suspicious activity, the web and black market websites for your personal information, and your credit. Most will also keep an eye out for any new accounts opened in your name, be they bank accounts, TV subscriptions, utilities, or loans. Whenever they spot something suspicious, the customer is notified so they can take the necessary steps to protect themselves.
- Restoration: If your identity has been compromised in any way, quality identity theft protection companies will have expert staff on hand to guide you through the process of restoration. This could mean canceling and replacing cards, removing fraudulent charges, and freezing your credit, among other things.
- Insurance: In the event that you suffer monetary damages as a result of identity theft, a subscription typically comes with US$1 million of insurance to compensate each customer. If an attorney is needed, this can cover legal fees as well.
Many of the services that identity theft protection companies offer can in fact be done by the customer on their own behalf. Removing fraudulent charges from a credit card bill, for instance, is a fairly simple process that can be performed over the phone with the card holder’s bank. Other services are not so easily accomplished as an individual, such as monitoring black market websites for your information. Of course, the $1 million in insurance is a benefit not offered by most banks and credit card companies.
That’s entirely up to you. US Citizens are entitled to one free credit report every year from each of the national credit rating bureaus, and Canadians get them free too. Other countries aren’t so lucky. If you are in a position in which you need to monitor your credit more frequently and closely, however, then it may be worth the investment. Past victims of identity theft in particular should consider this option.
Most identity theft protection companies offer $1 million in insurance to compensate the customer for any damages that come about as a result of identity theft. However, insurance requires the customer to file a claim. That claim could be rejected or be only partially compensated. Guarantees offered by some companies are typically better, as they are much more lenient when it comes to compensation and can cover other costs such as legal fees. Be sure to read into a company’s insurance and/or guarantee policy before subscribing, as each one differs.
Synthetic identity theft is the fabrication of a new identity using partial information from an existing identity. For example, the thief might create a new “person” using a real social security number but someone else’s name and birth date. This can be difficult to track as the effects may not be evident to either party. A new credit report can be generated for the fake individual, which could lead to mix ups and negative effects on credit ratings in the long term.
Instead of using someone’s personal information for financial gain, medical identity theft is using someone’s identity to obtain medical care or drugs. This happens as a result of a stolen insurance card and other personal info. Besides the financial harm, fraudulent information can be added to a person’s medical records.
A data breach is, in the modern day, the most common way that a person’s personal information becomes available to identity thieves. Hackers can breach the servers of banks, credit card companies, retailers, and anyone else who keeps an insecure database of customer records. Those records are sold on the black market, where thieves use the information to conduct identity theft. Data breaches often leak thousands of individual’s information at a time.
Children’s social security numbers are valuable because they are essentially clean slates–they have no information already associated with them. Because a child isn’t likely to need a good credit rating for many years to come, child identity theft can go on for years without anyone noticing. Often a family member or friend is responsible, but strangers are also threats. A study by the Carnegie Mellon Cylab reported that 10 percent of identity theft victims are children, and the problem seems to be growing.
A fraud alert can be placed on your credit report at each of the national credit rating agencies so that if anyone attempts to open a new account in your name and requires a credit check, you will first be alerted. Individuals who feel they are at high risk of identity theft, i.e. their identity was compromised in a data breach or they have previously been victims of identity theft, should consider placing fraud alerts on their credit reports via the protection service they’ve subscribed to. Fraud alerts notify companies that require a credit check that the person is at risk, and they take extra care to avoid identity theft. The most common type of fraud alert lasts 90 days and must be renewed at expiration.
Security freezes are a more extreme alternative to fraud alerts that completely lock access to a person’s credit file. Creditors cannot check the file and thus no new accounts can be opened. Security freezes should not be enacted lightly, as your current accounts–phone, utilities, landlords–might need access to them. Any changes to your information, such as moving to a new address, won’t be recorded. Make sure no one will legitimately require timely access to your credit file while the freeze is in place.
Due to the private nature of identity theft protection, family plans are typically not an option. However TrustedID is one of the few companies that offers true family plans. Other services will let you add family members to your subscription, but they are essentially independent accounts and will not result in cost savings. To open an identity theft protection subscription on behalf of someone else, say a child or elderly parent or grandparent, you will need power of attorney over that person.